Copyright The Street
When the United States government blocked the merger between Kroger and Albertsons, it celebrated that as it it was winning a battle for the American people. “The FTC, along with our state partners, scored a major victory for the American people, successfully blocking Kroger’s acquisition of Albertsons. This historic win protects millions of Americans across the country from higher prices for essential groceries — from milk, to bread, to eggs — ultimately allowing consumers to keep more money in their pockets,” the Federal Trade Commission (FTC) shared. It was a victory that the agency celebrated which seemed to miss the fact that regional grocery chains have to compete with national players including Walmart, Target, and Costco, which don’t need to make money on groceries. “This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons‑owned grocery stores for their everyday need. This is also a victory for thousands of hardworking union employees, protecting their hard‑earned paychecks by ensuring Kroger and Albertsons continue to compete for workers through higher wages, better benefits, and improved working conditions,” it added. The blocked merger may have been good for workers, but it’s benefits for the American people are dubious. A combined Kroger and Albertsons would still have been meaningfully smaller than Costco, Amazon, and Walmart by market cap. Grocery sellers market cap (Nov. 3, 2025) Kroger Co. (KR): $42.17 billion Albertsons Companies, Inc. (ACI): $9.71 billion. Target Corporation (TGT): $41.59 billion. Walmart Inc. (WMT): $806.69 billion. Costco Wholesale Corporation (COST): $403.93 billion. Amazon.com, Inc. (AMZN): $2.728 trillion. The FTC seems to have missed that Kroger and Albertsons don’t just compete with each other and other supermarket chains. They have to battle companies including Walmart, Costco, Amazon, and Target, which don’t need to make money selling groceries. Walmart, for example, has passed all supermarkets put together with 37.4% of the e-grocery market compared to 27.3% for traditional grocery chains in the second quarter of 2024, Grocery Dive reported. “When Walmart is growing their share of online grocery that much, at some point competing retailers are not just fighting over online dollars — this is going to start coming out of their physical stores. And that should really scare people,” Gary Hawkins, founder and CEO of the Center for Advancing Retail & Technology, said during an April webinar. Walmart, Costco, Target, and Amazon take over another key area Walmart has been known to absorb price increases to a greater extent than its rivals. “Between January 2022 and February 2023, Walmart kept prices roughly steady — just a 3% increase — across digital and physical channels, while competitors raised prices higher. Specifically, Amazon showed a 7.5% increase in the prices of those products, and Kroger and Target both raised prices 9%,” according to data from analytics firm Dataweave, which looked at nearly 600 products from national brands, according to Reuters. Costco has famously always kept its prices low because it makes about 60% of its operating profits from membership fees. Now, Walmart, Costco, Amazon, and Target have targeted fresh produce (and other fresh items) in their next wave of attacking traditional grocery chains. “It’s no secret why nationals have made it a strategic imperative to increase their share of the fresh dollar. It’s the same reason Amazon began its grocery adventure nearly a decade ago: frequency. Frequency is also the motive behind Amazon’s recent debut of free same-day fresh food delivery for Prime members. Frequency has long been the strength of regional and specialty grocers, while nationals generally capture larger baskets on fewer trips. Fresh food makes the difference,” Alix Partners shared in a new report. 2025 fresh grocery market share Traditional grocery: 46.4% Mass and SuperCenter (essentially Walmart and Target): 18.6% Warehouse clubs: 13.7% Discount chains: 10.4% Source: Alix Partners By growing their share of the fresh space, national retailers are taking market away from regional grocery chains. “Non-traditional grocery retailers have not only successfully invaded territory at the very foundation of the grocery industry, they are also digging into fresh more deeply by building new supply facilities, expanding private label and more — and that could have profound consequences for supermarket operators,” Sam Silverstein wrote for Grocery Dive. John Clear, an AlixPartners partner who formerly served as a purchasing executive for Lidl US explained to GroceryDive why this shift in sales matters. “The whole grocery economics model is founded on having low-rate, high-velocity SKUs offset by high-rate, slow-velocity SKUs so that you can make the whole box make sense,” Clear explained. “So if you’re in a traditional grocery model and you lose [fresh sales] … you’re left with slower moving SKUs that turn into profit less quickly.”
